The new legislation requires BHPH dealers, on every vehicle sold or leased, to:

Restrict the use of global positioning satellite (GPS) and starter interrupt devices,
unless the buyer has been advised. As with all consumer advisory requirements, the
department recommends the advisory statement be in writing and the buyer’s
signature is obtained on such written document.

Affix and prominently display a label on any used vehicle offered for retail sale that
states the reasonable market value of the vehicle. The label must meet all of the
following conditions:
—Printed with a heading in at least 16-point bold type that reads

“REASONABLE MARKET VALUE OF THIS VEHICLE”

with text at least 12-point type.

—Located adjacent to the Used Car Buyer’s Guide located prominently and
conspicuously on the vehicle so that it is readily readable.

—Identify all equipment included with the vehicle.

—Contain the information used to determine the reasonable market value of the
vehicle, including, but not limited to, the use of a nationally recognized pricing
guide for used vehicles.

—Contain the date the reasonable market value was determined.

—Indicate that the reasonable market value is being provided only for comparison
shopping and is not the retail sales price or the advertised price of the vehicle.

Last year, I woke up to the sleeping giant of auto finance. Over the last decade, we’ve witnessed an explosion of startups building software that dramatically cuts inefficiencies in the exchange of information, goods, and services – disrupting industry incumbents in the process. In the last year, Silicon Valley is finally turning its attention to the auto industry, and we see good reason to be excited about the next-gen upstarts that are changing the way we buy, sell, use and pay for cars.

Bigger than an Escalade

Auto sales and finance is a massive industry – with over 51 M units sold in 2013, and total leasing and finance revenues projected to hit nearly $98B in 2014. State laws, like those Tesla is currently battling, have historically prohibited direct sales from manufacturers to consumers, which means that in the age of Amazon efficiency, buyers are still stuck footing the bill for dealer overhead and OPEX. Resources like Truecar, Kelly Blue Book, andEdmunds.com have reduced – but hardly eliminated – asymmetry of information between dealers and buyers regarding car value, but can’t alter the fact that fees and mark-ups are essential for dealers to cover their overhead. Thus dealers will continue to push features and pad margins through obscure little line-items like dealer documentation fees – which vary as much as $500 by dealership.

Start-ups like Carvana and Beepi are taking used car sales online – reducing opex and passing on savings to both buyers and sellers. Carvana, which acts as a virtual dealer, leverages online distribution and direct-to-consumer delivery to manage inventory more efficiently and eliminate costs associated with managing a physical lot and salesforce. Beepi facilitates P2P sales via an online marketplace – managing the delivery process and offering sellers a purchase guarantee if no one buys within 30 days. Both companies are able to shave as much as $1,500 –to $2, 000 off the price of a used car, with Beepi further promising sellers a premium over dealer trade-ins (they just raised $60m).

Dumber than a Hummer

Like auto sales, auto finance is ripe with opportunity to reduce costs and improve customer experience. Misclassification of borrowers is a persistent problem within auto, just as in other consumer finance verticals. For example, 66% of generation Y (16-33 year olds) are classified as subprime. Clearly, 66% of this cohort is not conventionally high risk – a large majority simply have little to no credit footprint, or relatively large debt/income ratios due to student loans. Companies like L2C and Neo Finance are looking beyond credit scores and traditional data to segment thin/no-file borrowers from truly high-risk auto loan applicants. And better data is just part of the puzzle. Better models that can parse, contextualize, and learn on complex data sets are also needed. Companies like Cognical and Zest are already pushing the boundaries of underwriting technology in consumer finance – similar innovation can be applied in auto.

Maserati on a Mazda Budget

The complexities of underwriting aside, there is also significant opportunity to increase efficiencies via better distribution of auto finance and insurance – and opportunity to improve customer experience in the process. Consider buy here pay here lots (BHPH) and aggregate auto financiers. These are lenders of last resort – charging 18% -29% APR to high risk borrowers, and offering less flexible terms than banks, credit unions, or the captive lenders (Ford Finance, etc). Yet over one in five BHPH borrowers are prime or near prime.Collectively BHPH and aggregate lenders control 23.12% of the auto loan market (or ~$225B loans outstanding), meaning anywhere from $45B to $55B in capital could be more efficiently deployed in lower cost products.

This is clearly a distribution problem waiting for a marketplace solution. A large segment of borrowers would benefit significantly from increased access to and understanding of the financing options available to them. Likewise, a large segment of lenders (such as credit unions) would benefit from the opportunity to compete for these borrowers. We anticipate auto finance will follow evolution seen in consumer and SME credit – where the rise of online to marketplace and aggregation platforms have enabled borrowers to find and compare a variety of products from numerous lenders in a transparent and efficient way. This evolution is already occurring in auto insurance. Coverhound, (disclaimer, we’re invested), allows customers to browse, compare, and buy plans all online – saving them literally hundreds of dollars on their premiums.
Transparent online and mobile platforms will not only empower borrowers to access the best products available to them in the market, they will also cut out the spreads that dealers currently layer on to finance and insurance (“F&I” in industry parlance) products. Dealers make most of their margin on F&I sales – over $1,200 per vehicle on average for the publicly traded dealers. While F&I is just 3% of dealer revenues it accounts for about 20% of profits. These spreads are added to base rate in order to compensate the dealer for selling the product on behalf of the lender or carrier. In the case of financing, dealers often have discretion over the amount of the spread, and may add on anywhere from 1-2.5% APR. Unfortunately, this incents dealers to land customers in the priciest car (and loan) they can afford (or can’t), to increase the value of that spread. Even worse, recent CFPB analysisfound evidence of discrimination in the application of APR mark-ups, with African Americans, Hispanics, and Asians consistently receiving higher discretionary mark-ups than white customers.

Given these misaligned incentives and potentially biased behavior, it’s no wonder that consumers are now spending 11 hours on average researching a car before they set foot on one lot – presumably to arm themselves with information and avoid the car sales guy like Ebola. Disrupting information asymmetry was a natural first step for online auto – but the next wave of energetic start-ups will finish what TrueCar began, by closing the loop between knowledge and action. Very soon, customers will be able to research, browse, finance, and insure their car online – with the vehicle delivered to their door in less time and for less money than ever before.

(Thanks to Colleen Poynton for her thought-leadership on auto finance)

What’s a VIN?
A Vehicle Identification Number (VIN) is the 17-character identifier for your car, truck, or motorcycle. It looks like this: 1VXBR12EXCP901213, and encodes the vehicle’s manufacturer, features, and serial number. No two vehicles have the same VIN, so it serves as your car’s fingerprint– this allows for all reports of accidents, title problems, insurance incidents, and more to be tracked through each vehicle’s VIN.

Through VinAudit.com, you can look up records associated with your VIN instantly:

Where can I find my VIN?
You can find your vehicle’s VIN in the title document, the vehicle registration, and on the insurance policy. The VIN could also be located at the following locations on the car itself:

On the driver’s side dashboard
(viewable through the windshield)

On the driver’s side door
(on a sticker in the door jamb)

Why would I order a VIN report?
A VIN report lets you learn about your vehicle’s history. It includes checks for whether the car has been stolen, experienced accidents, recorded as salvaged, as well as many othertitle problem checks. Ordering a VIN report before purchasing a vehicle allows you to catch potential problems and purchase with confidence.

Beepi Raises $60 Million in Series B Funding to Fuel National Expansion

Peer-To-Peer Marketplace Transforming the Way People Buy and Sell Cars

Beepi, the leading peer-to-peer marketplace to seamlessly buy and sell cars online, today announced it has closed $60 million in Series B funding. In this round, Foundation Capital and SherpaVentures join existing investors Redpoint Ventures, SherpaFoundry CEO Tina Sharkey, OLX founder Fabrice Grinda, IG Expansion co-founder Jose Marin, Homeawayco-founder Brian Sharples, former Loopnet CEO Rich Boyle and Silicon Valley Bank. The new infusion of capital will allow Beepi to accelerate the growth and expansion of its platform, bringing seamless, hassle-free car buying and selling to consumers across the United States.

“Beepi is transforming the antiquated car industry. This investment will help us to continue to make significant strides to change how Americans are buying and selling cars, the most expensive purchase many people are making,” said Ale Resnik, CEO and co-founder of Beepi. “The past six months have shown us that there is a real demand to buy and sell cars 100% online and we’re excited for the next stage of growth for the company.”

This Series B funding comes on the heels of Beepi’s recent expansion into the Los Angeles market and the introduction of Beepi Prime – its exclusive, customized delivery service – in 140 U.S. cities. As part of its seamless financing experience, the company also offers prospective buyers immediate pre-approval for loans at check-out. Buyers can pay for any car in the Beepi marketplace with a bank transfer, cashier’s check, up to six different credit cards at once or even bitcoin.

“As early investors in Lending Club, we saw the power of marketplace lending to enable both sides of a financial transaction to win — for transparency and simplicity to make everyone better off. We are thrilled to back Beepi, which is reinventing another hundred year old industry with the world’s first high-trust, peer-to-peer, used car marketplace that when combined with compelling auto financing options has the potential to blow open a massive market opportunity hidden in plain sight,” said Steve Vassallo, General Partner at Foundation Capital, who will be joining Beepi’s board.

“Uber has shown that huge segments of the population are being reshaped by the on-demand economy. Much like Uber revolutionized personal transportation, Beepi is revolutionizing the way we think about buying and selling cars,” said Shervin Pishevar, Managing Director & Co-Founder of SherpaVentures and Strategic Advisor and Board Observer at Uber. “Beepi takes a wildly unpleasant experience like buying a used car and transforms it into one filled with delight, trust and ease. This investment is an opportunity to bring that joyful Beepi experience to people across the country,” stated Pishevar, who will also become a Board Observer at Beepi.

Much like Tesla and Uber, Beepi has established itself as a disruptive force in the auto industry. Currently the company receives over 1,000 requests a week to sell cars from residents in the San Francisco Bay Area alone. As it continues to recreate how people approach buying and selling cars, Beepi will continue to expand its offerings and simplify the process for buyers and sellers alike.

About Beepi

Founded by Ale Resnik, CEO, and Owen Savir, COO, Beepi is a new way to buy or sell a great car completely online. For too long, buying and selling a car has been a complex and even terrifying process — whether it be because of poor experiences at dealerships, spending too much time haggling over prices, or ending up with a vehicle that falls way below expectations. Beepi is changing that experience by giving consumers an end-to-end experience when buying or selling a car; one that’s also fast, simple, safe and fun. For more information, please visit www.beepi.com.

The State of California “brands” its titles. These brands indicate the vehicle’s past history.

Here are the DMV definitions of those brands as reported on the California Department of Motor Vehicle website.

Salvaged: Vehicles marked with a “salvaged” brand were involved in an accident or incurred considerable damage from another source, such as a flood or vandalism. This brand includes previously dismantled (junked) vehicles.

Original Taxi or Prior Taxi: Vehicles formerly used “For Hire” which usually have high mileage.

Original Police or Prior Police: Vehicles formerly used by law enforcement and which usually have high mileage.

Non-USA: Vehicles manufactured for use and sale outside the United States which have been converted to meet Federal and California safety and emissions standards.

Warranty Return or Lemon Law Buyback:Vehicles which have been returned to the manufacturer under California’s Lemon Law.

Remanufactured; Vehicles constructed by a licensed remanufacturer and consisting of used or reconditioned parts. These vehicles may be sold under a distinctive trade name.

The California website does an excellent job explaining the definition of salvage titles and what to expect. Here are some excerpts from the website:

A salvage vehicle is a vehicle that has been wrecked or damaged to such an extent that it is considered too expensive to repair. The title, license plates, and a required fee are submitted to the Department of Motor Vehicles (DMV) and a Salvage Certificate is issued for the vehicle.

Although many salvage vehicles are expertly repaired, some vehicles: are not properly repaired and/or tested and may be dangerous to operate and have been repaired with stolen parts. If the California Highway Patrol or DMV determines the vehicle or its parts have been stolen, the vehicle cannot be registered and the vehicle or parts will be seized.

Sellers, including dealerships, are legally required to disclose the vehicle’s salvage title and history, but the law is difficult to enforce, especially when cars come in from another state. I’m not trying to sound like a commercial for CarFax, but the service can be invaluable when dealing with used cars that may be from other states.

The website also reports some of the following “clues” may indicate the vehicle has an undisclosed salvage history.

Signs of major repairs on the inner fender structures.

Mud, mold, or rust under the carpet in the trunk.

Vehicle Identification Number (VIN) plate attached with materials other than rivets.

Safety restraint light is always on.

Airbag covers are resealed or improperly installed.

National Highway Traffic Safety Administration (NHTSA) labels which usually appear on doors, inside hood, tailgate, or hatchback are missing.